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AS Edexcel business whole summary notes (theme 1 + 2)
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AS business whole summary notes for theme one and two. in order to the specification. Enjoy :)
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AS Edexcel BusinessTheme 1: Marketing and People
People (HR)
1.1.1 - THE MARKET
A market is where buyers + sellers meet.
Mass markets
Aimed at the general population.
➔ Product sold to everybody in same way - adverts etc
➔ Economies of scale - marketing, purchasing, technical
➔ Average cost per unit falls, profit margin increases
➔ Straightforward, everyone targeted
➔ Lots of competition
➔ Homogenous products need to be differentiated through marketing -
expensive
➔ High volume of production, inflexible to demand changes
Niche markets
Subset of main market, address specialist needs.
➔ Particular segment
➔ Charge premium price
➔ Easy to target customers
➔ Small scale production
➔ Less competition
➔ Risky- demand not constant, higher unit costs, no EoS
Dynamic markets
➔ Changing all of the time
➔ Online retailing is constantly changing, developing and expanding
➔ Experience shopping
➔ Pros of online shopping:
- 24/7
- Automatic, no staff
- International markets
- Low overheads as no shop
- Stock easily updated
- Easy to set up
- Flexible
- Fast growth
➔ Cons of online shopping:
- 71% prefer to browse online then [purchase from shop
- Issued on returns - put off
- Online security worries
- Competitive
- Need IT skills
- Fraud/ spam/ viruses
- Competitors easy access
Innovation + market growth
➔ Constantly changing tastes + preferences
➔ Technology
, ➔ Increase is migrants - kosher/ halal meats needed
How competition affects the market
➔ More efficient
➔ Listen to needs
➔ Less wasteful
➔ Good quality
➔ Homogeneous - non-price factors, promotion
Risk + uncertainty
Risk - potential unknown. Uncertainty - no outcomes known in advance,
opportunity for profit, innovation.
1.1.2 - MARKET RESEARCH
Product + market orientation
Product: product is most important factor when providing products for a
market
Market: consumer most important factor when providing products, has a
sensitivity to customer’s requirements
Market research
Why do businesses do research?
➔ Understand needs
➔ Estimate price that customers would pay
➔ Competition
➔ How to differentiate
➔ Market size - is it worth it
➔ Understand how the product will be received
➔ Prototype
Why would a business collect data?
➔ Potential demand
➔ Promotions suitable
➔ Competition
➔ Customer profit
Benefits to market research
➔ Reduces risk + cost
➔ Marketing plan
➔ Prepare for changes in market
➔ Market orientation
Primary research
➔ Original data created by researcher
➔ Information does not exist yet, so cannot be found on internet
➔ Brand new data business will gather about product/ service
➔ Use data to make specific decisions about business: new product launch
Questionnaire
➔ Survey of customers who use the business
➔ Measure customer satisfaction
Interview
➔ With owners, customers, suppliers
➔ Gauge reactions to new tastes/ ideas the business is having
➔ Very specific to company
Observation
➔ Gather data from watching buyer’s behaviour
➔ Do customers shop[ alone/ in groups?
➔ Notice of carefully placed promotion
➔ Route taken around store
, Loyalty cards
➔ Trach behaviour, micro market to customers specific offers
➔ Targeted offers more likely to use
➔ Marketing cost effective
➔ Incentive to return - stamp card, but do not get details
Focus groups
➔ Target market demographic
➔ Respondents chosen to take part in trial
➔ Use product over time, group to discuss
➔ Specific qualitative information on how feel about product
Consumer panel
➔ Experts selected by agency to answer series of questions about
product/ service
➔ Usually independent
➔ Panel carry out own research into needs of target consumer - through
eyes of customer
Test marketing
➔ Invent, produce, trial new product
➔ Staff may agree good, but public different view
➔ Carefully chosen sample based on reactions - launch/scrap
1.1.3 - MARKET POSITIONING
➔ Market mapping
◆ In order to identify a gap in the market, it may be useful for a
business to construct a diagram where competitors are on two
axis (quality + price)
➔ Competitive advantage
◆ Way the product is made superior to the competition to the
target market
◆ Achieve profits above average for that industry if have
competitive advantage
◆ Achieved using resources to achieve either:
● Cost adv - skilled workforce + efficient operations
● Differentiation advantage - resources used to create
superior value
➔ Purpose of differentiation
◆ Product is different from the competitors in some way
◆ Consumers must be able to perceive this difference + may be
willing to pay a premium price for the product
● Through reputation
● Through customer service + after sales
● Through value for money
● Through product features
➔ Adding value
1.2.1 - DEMAND
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